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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 21, 1998
CERULEAN COMPANIES, INC.
(Exact name of registrant as specified in its charter)
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Georgia 333-2796 58-2217138
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
3350 Peachtree Road, N.E., Atlanta, Georgia 30326
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (404) 842-8000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On September 3, 1997, a lawsuit (the "Lawsuit") was filed in the Superior Court
of Fulton County by Plaintiffs Let's Get Together, Inc.; Statewide Independent
Living Council of Georgia, Inc.; Living Independence for Everybody, Inc.; Aids
Survival Project, Inc.; Women's Policy Education Fund, Inc.; Disability
Connections - The Middle Georgia Center for Independent Living, Inc.; Physicians
for a National Health Program, Inc.; Campaign for a Prosperous Georgia, Inc.;
and Friends and Survivors Standing Together, Inc. (collectively, the
"Plaintiffs") on behalf of themselves and a class putatively composed of all
other 501(c)(3) organizations in Georgia seeking, among other things, to
invalidate a Georgia statute upon which certain aspects of the conversion of
Blue Cross and Blue Shield of Georgia, Inc. ("BCBSGA") from a not for profit
corporation to a business corporation were based. The complaint named BCBSGA, a
subsidiary of Cerulean Companies, Inc. (the "Company"), the Company and the
Commissioner of Insurance of the State of Georgia as defendants. An additional,
similar request for declaratory ruling was filed with the Georgia Insurance
Department on September 3, 1997.
The Plaintiffs' claims related to the conversion of BCBSGA from a non-profit
entity to a for-profit entity which occurred as part of a Plan of Conversion
submitted to a public hearing November 21, 1995, and approved by the Georgia
Commissioner of Insurance in an order dated December 27, 1995. The complaint
sought to have the fair market value of the assets of BCBSGA as of December 27,
1995, plus interest from December 27, 1995, placed in a public trust for the use
and benefit of a class of non-profit charitable organizations. On October 2,
1997, the Georgia Insurance Department denied the Plaintiffs' request for
declaratory ruling, which decision the Plaintiffs appealed. On October 13, 1997,
the Company and BCBSGA filed a motion to dismiss the Lawsuit. Oral argument was
held on January 12, 1998.
On July 8, 1998, the Company entered into a stipulation and agreement of
settlement of the Lawsuit (the "Stipulation") subject to the approval of the
Superior Court of Fulton County, Georgia (the "Court"). Under the terms of the
Stipulation, the Company will endow a new non-profit foundation for the
advancement of health care for all Georgians with $1.0 million in cash, and
common stock and warrants for non-voting preferred stock in the Company
aggregating 20% of the total equity in the Company after their issuance. The
exercise price for the warrants is $21.0 million. On August 17, 1998, six
individuals, including two shareholders, filed a motion to intervene in the
lawsuit and an objection to the settlement. A settlement hearing was held on
August 20, 1998 to determine, among other things, if the terms and conditions of
the Stipulation were fair and reasonable and should be approved by the Court.
On August 21, 1998, the Court denied the motion to intervene and entered a final
order approving the settlement as set forth in the Stipulation. Upon the
expiration of all appeal periods, the Order will become effective.
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CERULEAN COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CERULEAN COMPANIES, INC.
Registrant
Date: August 27, 1998 By: /s/John A. Harris
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John A. Harris, Treasurer
Date: August 27, 1998 By: /s/Hugh J. Stedman
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Hugh J. Stedman, Secretary
